Dow Jones futures rose early Friday, along with S&P 500 futures and Nasdaq futures on China trade optimism, signaling a solid end to a strong week for the coronavirus stock market rally. Thursday’s mixed session was quietly bullish. The software sector remained strong: Salesforce.com (CRM), Paylocity (PCTY) and Alteryx (AYX) broke out, while Zscaler (ZS) and Shopify (SHOP) blasted above short consolidations, while 2019 IPOs Cloudflare (NET) and Datadog (DDOG) keep running.
Tesla (TSLA) continues to trade right around the 1,000 mark. Tesla stock got a huge price target hike early Thursday while the electric automaker is closing in on a deal for a Cybertruck factory in Austin, Texas.
Shopify stock and Cloudflare stock are on IBD Leaderboard, along with Adobe stock, Microsoft stock and Tesla stock. NET stock is also on SwingTrader. MSFT stock and ADBE stock are on the IBD Long-Term Leaders list. Salesforce stock is on the Long-Term Leaders watchlist.
Paylocity stock was Thursday’s IBD Stock Of The Day, Alteryx stock was highlighted Wednesday and Cloudflare stock on Monday.
Dow Jones Futures Today
Dow Jones futures climbed 1.1% vs. fair value. DJIA futures suggest a possible test of the 200-day moving average. S&P 500 futures advanced 1%. Nasdaq 100 futures rose 0.85%.
China reportedly will step up purchases of U.S. agricultural goods, a positive sign for the phase one trade deal.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session. Early Thursday, Dow Jones futures fell in volatile fashion, missing the DJIA’s modest, tame decline.
Coronavirus cases worldwide topped 8.60 million. Covid-19 deaths cleared 456,000.
Coronavirus cases in the U.S. have reached 2.26 million, with deaths above 120,000. Covid-19 infections on Thursday were the highest since May 21. They’ve topped 25,000 for the last three days and four of the last six. New coronavirus cases continue to hit new highs in places like California, Florida and Arizona, while Covid-19 hospitalizations keep climbing in Texas. But overall coronavirus death rates continue to trend lower in the U.S.
Brazil is closing in on one million coronavirus cases, as Latin America is the world’s hot spot. Russia, India and the Middle East also are showing rapid increases in Covid-19 infections.
Coronavirus Stock Market Rally
The coronavirus stock market rally had a relatively tame session, closing near session highs. The major indexes have rebounded solidly this week and are trading comfortably within a recent range.
The Dow Jones Industrial Average dipped 0.15% in Thursday’s stock market trading. The S&P 500 index rallied to close fractionally higher. The Nasdaq composite advanced 0.3%.
Growth stocks were mixed overall, but software was clearly strong.
The iShares Expanded Tech-Software Sector ETF (IGV) popped 1.4%, hitting a record high. DJIA stock Microsoft is the top IGV holding, with Adobe stock and CRM stock notable components as well. While MSFT stock rose “only” 1.1% on Thursday, the Long-Term Leader is up 4.6% this week. ADBE stock is up 3.4%, closing in on its fifth straight weekly gain.
Meanwhile, the VanEck Vectors Semiconductor ETF (SMH) dipped 0.1%.
Both IGV and SMH are solidly higher for the week.
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The Dow Jones today remains below its 200-day line, but the S&P 500 is solidly above that level while the Nasdaq is just below 10,000 and all-time highs. Ideally, the DJIA, S&P and Nasdaq would move sideways for a few weeks. That would give the coronavirus stock market rally time to digest big recent gains. It would also allow leading stocks to form new bases.
DJIA futures suggest that the quietly bullish market action may continue.
CRM stock rose 3.45% to 187.66, clearing a 184.90 handle buy point in a consolidation going back to Feb. 20. Salesforce stock technically cleared a 164.41 buy point in early May, but that was rather deep in the base.
PCTY stock jumped 7.1% to 143.91, above a 140.81 cup-with-handle buy point. RBC Capital Markets upgraded Paylocity stock to outperform on Thursday, raising its price target to 155 from 120.
The base was 56% deep for Paylocity stock, which is not a great sign. Paylocity is in the human capital management software business, so it’s perhaps understandable that shares would plunge as coronavirus restrictions shut down businesses and slashed payrolls.
The relative strength line for Paylocity stock hit a record high. The RS line, the blue line in the charts provided, tracks a stock’s performance vs. the S&P 500 index.
Alteryx stock leapt 6.5% to 160.78, hitting a record high and closing solidly above the 151.60 cup-with-handle buy point. Shares of the database software maker are now slightly extended past the 5% chase zone, which extends to 159.18. AYX stock jumped 3.6% on Wednesday, trading above the buy point for much of the day. So far this week, Alteryx stock is up 14%.
The RS line for Alteryx stock hit a record high.
Zscaler stock jumped 6.5% to 113.07, moving above a 112.83 high. ZS stock holders probably could buy a few more shares at this level. Early Thursday, Morgan Stanley upgraded Zscaler stock to equal weight with a 104 price target, below the current share price.
Shopify stock rose 5.65% to 863.56, hitting a new high and clearing a three-week consolidation. RBC Capital increased its price target on Shopify stock to a Street-high 1,000 from 825.
Earlier this week, Shopify reached an e-commerce deal with Walmart (WMT). Shopify’s 1,200 merchant customers will sell their products at Walmart.com.
SHOP stock gapped up on that Walmart deal, joining Leaderboard. But SHOP stock is up 16.3% this week and looks extended.
Cloudflare Stock, Datadog Stock
These two cloud-based 2019 IPOs have been on a tear. Cloudflare stock rose 2.6% to 36.73. NET stock has shot up 27% this week, well extended from Monday’s breakout just below 31.
Datadog stock leapt 4.35% to 86.65, hitting yet another high. Datadog late Wednesday announced a deal where its cloud security technology will be integrated with Amazon’s Elastic File System, used in Amazon Web Services. DDOG stock is up 11% so far this week after a 10.5% pop last week.
Tesla stock rose 1.2% to 1,003.96, back above the 1,000 level. TSLA stock got a boost from Jefferies, which hiked its price target to 1,200 from 650. Also, Tesla is closing in on a Cybertruck plant just outside of Austin, Texas. The electric vehicle maker is seeking more than $60 million in tax incentives. Tesla reportedly already has bought land for the factory. The goal is to have the Cybertruck plant up and running by late 2021.
It’s unclear if the Tesla Cybertruck will have sustained demand. The plant also is expected make the Tesla Model Y. So far demand for the brand-new Model Y has been somewhat sluggish. Does Tesla need two plants producing the Model Y for the North America market alone? With the Shanghai plant due to start producing the Model Y in the coming months and the upcoming Berlin factory as well, Elon Musk is betting big on the Model Y and expansion generally.
But, in the here and now, Tesla stock is right at all-time highs, up 7.3% for the week through Thursday. Shares rose 1% in Friday’s premarket, moving toward record highs. But TSLA stock is well extended from an 869.92 handle buy point.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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